--- title: "The Race Between 7 Brew and Dutch Bros is Officially On" url: https://burnaze.com/article/824775b6-ecef-447b-b684-dd654dc21ce2 source: "QSR Magazine" original_url: https://www.qsrmagazine.com/story/the-race-between-7-brew-and-dutch-bros-is-officially-on/ author: "Danny Klein" category: "Coffee & tea" industry: "Restaurants" segment: "Coffee & tea" published: 2026-05-20T16:35:24.000Z modified: 2026-10-31T13:17:50.276Z image: https://www.qsrmagazine.com/wp-content/uploads/2025/10/7Brewlocation.jpg --- # The Race Between 7 Brew and Dutch Bros is Officially On **TL;DR:** 7 Brew plans to open over 400 new locations in 2026, competing with Dutch Bros' established footprint in the QSR beverage space. Dutch Bros aims to expand to 7,000 domestic stores, with 800 new locations by 2029. *By Danny Klein, originally published in QSR Magazine on 2026-05-20. [Read the original](https://www.qsrmagazine.com/story/the-race-between-7-brew-and-dutch-bros-is-officially-on/).* ## Key facts - Dutch Bros to expand to 7,000 domestic stores - 7 Brew to open 447 stores in 2026 - Dutch Bros AUV up 10% over two years ## Story There aren’t any visible signs the QSR beverage space is cooling. Rather, it’s become a race to grab sites, adjust menus, and leverage what’s become one of the more-attractive margin and demographic opportunities in recent memory, especially as inflation narrows restaurant usage. Setting the challenger pace is Dutch Bros and 7 Brew, the latter of which just shared it’s planning to open north of 400 locations in 2026 after debuting more restaurants (281) this past year than the previous two combined. It’s appreciated growth over 4,200 percent since 2022, getting to 602 locations ahead of 2026. ## Market growth trends The industry should have two 1,000-plus-unit beverage brands joining the roughly 17,000-store U.S. orbit of Starbucks and 10,000 Dunkin’s by the time 2027 lands. Dutch Bros has opened 30 or more restaurants for 19 consecutive quarters and closed Q1 at 1,117, up from 1,012 a year ago. It took 33 years to crack the four-digit mark, but the company nearly doubled from September 2021 (when it went public) to August 2025. Today, Dutch Bros opens about a store every other day. If 7 Brew makes good on its FDD projection, it’ll be cutting the ribbon on 1.2 restaurants all 365 days (447 stores are slated) throughout 2026. ## Dutch bros expansion plans Dutch Bros recently hosted a sell-side Q&A at its HQ with some investors to go over plans amid increased competition and reiterate the company’s goal to expand more than sixfold to 7,000 domestic stores, including another 800 by 2029, or the “2,029 in 2029” it often touts. Dutch Bros and 7 Brew, at the base level, have different paths ahead. Dutch Bros is leaning more into corporate development over franchised and made the call a couple of years ago to focus on higher AUV shops, meaning a loftier rate of new stores opening in fresh markets and less infilling. Fortressing trade areas early on helped Dutch Bros build brand awareness and lower drive-thru wait times. But it also led to sales transfer and lower revenue per unit. Of Dutch Bros’ 41 openings in Q1, 33 were company run. On May 12, it announced the acquisition of Phoenix East Valley Franchise, bringing 29 more stores into the portfolio. There are 844 corporate Dutch Bros stores alongside 333 franchised. Those numbers were 695 and 317, respectively, a year ago. Meanwhile, 7 Brew closed 2025 with 578 franchised restaurants and 24 corporate—a company number that was flat year-over-year. Its 2026 outline calls for 437 franchised openings and 10 corporate. ## Competitive strategy From a less granular measure, William Blair analyst Sharon Zackfia, commenting on the Q&A, said Dutch Bros is focused on growing alongside its people pipeline and with an eye to building density in markets to facilitate frequency in a convenience-driven marketplace. It’s a strategy, Dutch Bros said, informed by data, pinpointing ideal spots in individual trade areas, and the right sequencing of locations. The chain’s AUV has hiked about 10 percent over the past two years despite densification (a brand record $2.16 million in Q1, higher than $2.026 million last year). Essentially, it’s benefitting from rising awareness parallel to strong new market openings. And regarding Zackfia’s people point, Dutch Bros said it has nearly 500 individuals in the pipeline to support development. Leadership turnover today at the operator level resides in the low single digits. An example of Dutch Bros’ overall premise in action has continued to unfold in Texas, where the chain climbed to 200-plus restaurants in about four years. It’s become Dutch Bros’ largest comp state by shop count and fueled close to 20 percent same-store sales growth across Q1. Dutch Bros layered enhanced paid media as it expanded and popped units up by competitors, often within a half-mile radius. CEO Christine Barone said Dutch Bros has observed higher AUVs the closer it gets to some of its legacy peers (likely a reference to Dunkin’ and Starbucks). Zackfia said that turn isn’t overly surprising given how Dutch Bros has performed in William Blair’s ongoing guest surveys. She said the chain might be the only brand growing its people infrastructure entirely internally. And you see it in the service levels that surface as a meaningful differentiating factor, leading to high perceived value. Dutch Bros has shown an above-average value perception over the past 18 months (more on that here). With a new chief shops officer about four months into the role (Taco Bell and CAVA vet Jennifer Somers), Zackfia added, opportunity exists to improve the consistency of operations via an upcoming launch of a new scorecard (called “Vibe Check) that focuses on key metrics while highlighting areas that can be improved. Notably, Dutch Bros said it does not prioritize speed over friendliness. “Labor deployment represents an opportunity to improve throughput as the company moves to shop-specific analyses alongside AI sales forecasting, data-driven labor scheduling, and automated labor tracking,” Zackfia wrote. The brand also said it’s in no rush to adopt delivery given its “Brorista” interaction with diners remains paramount to the experience. Dutch Bros stressed it was this equity, not potential operations bottlenecks, fueling the decision. Mobile ordering’s 15 percent sales mix is helped by the deployment of walk-up windows. Dutch Bros reiterated its long-term algorithm of 20 percent annual revenue growth and 30 percent store-level margins translating to 20 percent-plus annual growth in adjusted EBITDA. It’s predicated on single-digit same-store sales fully funded by cash from operations, with free cash flow anticipated to be consistently positive in 2026 and beyond. Total revenues in Q1 hiked 30.8 percent to $464.4 million and adjusted EBITDA 26.2 percent to $79.4 million as Dutch Bros raised its full-year guidance on every aim, including “at least” 185 openings (from 181). Dutch Bros management at the Q&A, like it did during Q1’s earnings call, confirmed there was no immediate impact from McDonald’s piloting special beverages in Colorado (where there was a market comparison). It believes its energy strength on customization remains a category splitter. If anything, the rising tide is leading to guests looking at Dutch Bros. When they do, Barone said in Q1, they realize it’s “quite different than what else is out there.” The brand in May also introduced “Myst Energy Refreshers.” The plant-powered drinks are carbonated, run fewer than 100 calories, and provide a lighter alternative to Dutch Bros’ typical “Rebel” lineup, which mixes 25 percent of sales. Barone said both are helping Dutch Bros snatch share in the energy landscape at the same time, with one (Myst) being more of an afternoon pick-me-up and the other (Rebel) serving as a hyped-up boost. ## Beverage market outlook However you dissect it, though, Zackfia isn’t concerned with any one brand maxing out the beverage opportunity. She said there’s favorable demographic trends and a growing appetite for bespoke hand-crafted drinks. Despite there being more than 45,000 U.S. coffee shops, William Blair’s analysis suggests the U.S. needs more than 16,000 more units over the next decade (using projected population growth and assuming a mid-single digit increase in per-capital away-from-home coffee consumption, below the 6.5 percent CAGR of the past five years). “Simply put,” she wrote, “it does not appear the market will be a zero-sum game anytime soon as the pie continues to grow.” 7 Brew’s FDD revealed average-unit volumes at $2.6 million across a growing comp base of 320 locations. Zackfia attributes a “meaningful part” of the gap versus Dutch Bros to the respective market densification strategies. Dutch Bros is in 25 states at 1,100 or so units. 7 Brew is already in 38 despite being roughly half the size. And 7 Brew also covers 18 states with 10 or fewer locations compared to nine for Dutch Bros. “As we know to be the case at Dutch Bros,” she said, “limited locations created outsized draw radii and supersized AUVs, which normalize with market densification.” In any event, Zackfia added, it’s clear the two can coexist. Again, looking at Texas, 20 percent of Dutch Bros’ unit base sits next to 15 percent for 7 Brew. It doesn’t seem to be dampening either’s performance. TD Cowen was in attendance for the Q&A as well and said, likewise, the biggest focus was on competition. It’s why, the company said, shares are trading near trough valuation and not allowing the stock to receive credit for strong execution (the brand was trading at about $55 Wednesday; it was in the $70s last fall). TD Cowen said the coffee shop field is seeing growing occasions given 80 percent take place at home. That’s a sharp contract to burger, pizza, and chicken segments where marked step-downs are rolling throughout 2026. To Zackfia’s point, those are closer to zero-sum realities than beverage. And the Texas stability, Dutch Bros said, suggests future potential. It is, in a sense, the epicenter of drive-thru competition. There are 900-plus company-operated Starbucks in the Lone Star state and 110 7 Brews. Outside of Texas, about 40 precent of 7 Brew’s 2026 planned openings reach seven states that represent only 7 percent of Dutch Bros’ footprint. Additionally, TD Cowen figures 8 percent CAGR for the coffee shop category going forward—the fastest-growing arena behind chicken. Dutch Bros’ will continue to pull other levers, too. Food was added in 2025 to pull the chain’s historically 33 percent morning mix closer to Starbucks (50 percent) and erase a veto point. The brand is not focusing on marketing food over beverages (margin realities), but saw a low-teens mix of sales in Q1 that topped expectations. Mix at company-operated shops in the quarter was 2.2 percent, primarily due to food, despite only 33 percent of shops featuring the menu. Food today is in 485 restaurants, including 11 franchised. The corporate fleet should largely be covered by the end of Q3. About 300 stores won’t be able to join. There are some intriguing growth trends emerging as well, TD Cowen said. One being the $20 million acquisition of Clutch Coffee that quickened market entry into the Carolinas. Dutch Bros bought the stores and reopened them under its banner. The seven that reactivated so far generated volumes 3X previous results. Also, the opening of Dutch Bros’ first walk-up-only store in November 2025 and, to an earlier discussion, the purchase of a sizable franchisee. The Q&A suggested, given this Phoenix case involved an operator retiring, these transactions will be opportunistic for Dutch Bros going forward rather than management exercising the right to purchase without a change in a franchisee’s circumstances. ## Entities - unit expansion (topic) - QSR (sector) - QSR Magazine (publication) - Starbucks (company) - Dunkin' Brands (company) - qsr industry (topic) - Danny Klein (person) - Dutch Bros (company) - 7 Brew (company) - William Blair (company) - Christine Barone (person) - Sharon Zackfia (person) --- Originally reported by Danny Klein, QSR Magazine (https://www.qsrmagazine.com/story/the-race-between-7-brew-and-dutch-bros-is-officially-on/). Summarized by Burnaze (https://burnaze.com/article/824775b6-ecef-447b-b684-dd654dc21ce2).